Pre-Opening Wheat Market Report for 5/25/2010

July wheat was 4 3/4 cents lower overnight. The dollar index was sharply higher again this morning.

The wheat market sold off yesterday, leading the grains to the downside in conjunction with a sharp rally in the dollar. Another sharp rally in the dollar overnight helped push the July wheat contract back down near the contract lows.

Traders said that the wheat market continues to run out of sellers on breaks, but one analyst noted that buyers are also on the sidelines and he added that a push below the contract low at 460 1/2 could generate a bout of increased selling by specs over the short term.

Weather remains favorable for the winter wheat harvest in the southern Plains with light to moderate showers falling in the central and south central Plains into this morning. A more general rain system is expected in the northern Plains into mid week with cooler temperatures pushing into the northern Plains and on into Midwest by this weekend. Light to moderate showers across the central and western soft red wheat belt into mid week may add to the generally favorable weather outlook that is stretching out into early June.

The weekly Winter Wheat Conditions report showed 66% of the crop rated good/excellent compared to 66% last week and 45% last year. The 10 year average for this time of year is 45%. The spring wheat crop is 91% planted compared to 79% last week and 75% last year when the northern Plains saw a very wet spring. The 10 year average planted for this time of year is 87%. Spring wheat conditions are rated 85% good/excellent. There was no comparison for condition last week and last year. The 10 year average good/excellent condition for spring wheat for this time of year is 70%.

This week’s export inspections for wheat were 20.3 million bushels, up from last week’s total of 13.063 million. Inspections need to average 19.265 million bushels each week to reach the USDA’s export projection for 2009/10. Japan is in the market for 131,000 tonnes of wheat this week on its regular weekly tender.